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FINANCE Wales has been accused by a leading academic and former director of the organisation of “loan sharking” after allegedly charging punitive rates of interest.

Some business people in Flintshire are also unhappy at the level of support the organisation is offering to new and growing firms.

Lack of access to suitable funding is seen as one of the biggest barriers to launching new business ventures in North Wales.

The criticism was voiced at a business seminar in Flintshire when several speakers alleged that Finance Wales was seeking more success from the businesses it backs – and that meant investing in already established, growing businesses rather than backing higher risk start-ups.

Phil Wildbur, of Ruthin-based business management and restructuring consultancy Turnaround Solutions, said Finance Wales had been seen as a lender of last resort but was now “retrenching” into areas of lower risk.

Guest speaker at the seminar, Professor Dylan Jones-Evans, a Bangor-based academic, said: “The biggest single factor stopping people starting in business is finance.

“I was a director of Finance Wales for four years. Finance Wales was there to fill a gap in funding. They have gone away from that.”

Professor Jones-Evans claimed that Finance Wales was now competing with high street banks and had backed away from investing in high risk start-ups.

He said it was wrong that fledgling business were being “forced to take 16% interest – 10% above base rate”.

He added: “That is loan sharking, as far as I am concerned.”

Peter Wright, Finance Wales investment director, told Business Post yesterday that the organisation had two or three years ago decided to reposition itself in the marketplace to strike a better balance between funding for early stage businesses at the pre-revenue stage and funding for expansion of existing businesses.

But he stressed that it had always been one of Finance Wales’ chief objectives to fill a gap in funding for new and early stage businesses and that remained the case.

“We have gone back into early stage development including spinouts because that is one of the key areas we should be supporting and we are rolling out that programme,” he said.

“Ideally we would have a third of our investment in early stage businesses, a third helping companies to grow and a third in management succession deals. At present it is about 40%, 50% and 10% respectively.”

Mr Wright said Finance Wales had recently introduced a more flexible loan structure with interest rates usually in the 10 to 15% band. Higher risk start-ups attracted loans at the higher end of the interest rate range. He added that Finance Wales did not compete with the commercial banks but tried to work alongside them to fund businesses.

Finance Wales’ initial £80m fund had been fully invested, but that had been topped up with an additional £30m from the Welsh Assembly Government and Barclays Bank to support new deals right across Wales - including Wrexham and Flintshire - not just in areas of Wales covered by EU funding programmes.